When an individual owes money to the Internal Revenue Service, it can be frightening to consider the things the agency may do to collect the money. In some cases, the individual is even disputing the owed taxes while living in fear that bank accounts will be drained or pay checks taken. Though the IRS does have a lot of power when it comes to collecting debts, in most cases, it cannot garnish an entire paycheck.
According to the U.S. Department of Labor’s Fact Sheet #30, there are limitations on how much can be garnished from a worker’s paycheck, even if there are multiple collection activities in play. According to the fact sheet, the amount that can be garnished from your check is 25 percent of your disposable earnings.
The 25 percent figure changes for people who make more than 30 times the current federal minimum wage. At that point, garnishments can take up the total amount of the overage up to 40 times the minimum wage. After the 40 percent mark, garnishment tops out again at 25 percent.
Even losing 25 percent of disposable earnings can be a hit to most people, which is why it’s important to fight IRS bills when you believe they are wrong or work in advance of a bank or wage levy to handle tax issues through payment plans or offers in compromise. Another reason to attempt to avoid garnishment is to protect your job. An employer cannot fire you for a single garnishment, but there is no federal protection against being let go if there are two or more garnishments in place.
Source: U.S. Department of Labor, “Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act’s Title 3 (CCPA)” Oct. 03, 2014